Keeping CPAs Up to Date on Tax Matters
A site devoted to articles on current developments in federal taxes geared toward CPAs in tax practice.
The fact that the taxpayer didn’t retain the right to substitute entirely different property, but rather was limited to changing the boundaries of the conservation easement by no more than 5% did not get the taxpayer in the case of Balsam Mountain Investments, LLC, et al v. Commissioner, TC Memo-2015-43 a positive result.
Read MoreThe IRS issued a new Audit Technique Guide entitled Real Property Foreclosure and Cancellation of Debt Audit Technique Guide that is meant to provide guidance to agents who encounter issues involving foreclosures and/or cancellation of debt. However, as is true of many other such guides, the guide also provides a reasonably useful primer on the tax treatment in this area and contains some hints about the National Office of the IRS’s thinking on certain issues that may not be clear.
Read MoreIn the case of Panetta v. Commissioner, TC Summary Opinion 2015-16, the Tax Court did not have sympathy for a taxpayer claiming innocent spouse relief when:
The Eighth Circuit rejected a taxpayer’s attempt to structure an equipment like kind exchange (LKE) program to effectively allow a related taxpayer the use of the sales proceeds in the case of North Central Rental & Leasing, LLC v. United States, CA8, 115 AFTR 2d ¶ 2015-494.
Read MoreIn the view of the Tax Court (but not the Fifth Circuit) the taxpayer and the IRS didn’t understand the real issue, but the Tax Court sent them back to look at the issue in a different way, resulting in a potentially significant decision in the case of Pilgrim’s Pride Corporation v. Commissioner, 141 TC No. 17. The case ended up turning on the issue of whether it is possible for a taxpayer to achieve an ordinary loss when abandoning a security under the current version of IRC §1234A.
While the decision has been overturned on appeal (Pilgrim’s Pride v. Commissioner, CA5, 115 AFTR 2d ¶ 2015-477, reversing 141 TC No. 17), it remains to be seen if the Tax Court will continue to apply this view of IRC §1234A outside the confines of the Fifth Circuit.
Read MoreThe IRS has proposed, via Notice 2015-21, an optional “safe harbor” method of determining slot machine sessions for purposes of tracking gambling wins and losses. The notice contains a proposed revenue procedure that would be effective for tax years ending on or after its date of publication. So it’s important to note the IRS is neither endorsing this method for returns currently being prepared, nor giving any assurance that this method will be respected for 2015.
Read MoreErroneous Forms 1099C continue to plague clients and they often come from sources that an adviser would think should know better. In the case of Bacon v. Commissioner, TC Summary Opinion 2015-15 the offending issuer was, like in the case of Kleber v. Commissioner, TC Memo 2011-233, an agency of the United States government, though this time it was the Federal Emergency Management Agency (FEMA) rather than the U.S. Navy.
Read MoreWith the problems arising from the erroneous Forms 1095-As issued by the Department of Health and Human Services that was announced on February 20, the IRS advised taxpayers to hold off on filing returns until corrected forms were issued. However, certain qualifying farmers and fisherman can qualify for relief from the general requirement to pay estimated taxes quarterly, being able to pay the entire balance due with their return without a penalty so long as it is filed on or before March 1 of the following year.
Read MoreIn Chief Counsel Advice 201509029 the IRS disagreed with a taxpayer’s position that certain buildings on the taxpayer’s new and used heavy and medium-duty trucks and trailers sales and leasing facility qualified as 15 year property under asset class 57.1 of Revenue Procedure 87-56. Assets in that classification qualify for a 15 year, rather than 39 year, life for purposes of depreciation.
Read MoreThe IRS National Office clarified a mistaken reading of Revenue Procedure 2005-31 in Chief Counsel Email 201509037.
Read MoreSometimes events occur during an engagement that can cause an advisor to lose focus and fail to take into account issues the adviser knows about. That appears to have been the case in a series of private letter rulings, each of which basically duplicates what is found in PLR 201509020.
Read MoreIn the case of Legaspi v. Commissioner, TC Summary Opinion 2015-14, the Tax Court denied deductions claimed by a taxpayer—but did so using a standard that raises questions about what many clients obtain to document their charitable contributions.
Read MoreGeorge Resnik paid funds on behalf of his ex-spouse that initially met all of the requirements for deductible alimony and were labeled as support in his divorce decree. George’s payments met all of the basic “big four” requirements found in IRC §71(b)(1):
Read MoreThe next item the IRS has turned its sights on with regard to the Affordable Care Act is the “Cadillac tax” found in IRC §4980I on high cost coverage that will take effect for taxable years beginning after December 31, 2017. In Notice 2015-16 the IRS details proposed approaches to dealing with various issues under that tax.
Read MoreIn the case of Duffy v. United States, US Court of Federal Claims, 115 AFTR 2d ¶2015-438 the taxpayers were looking to either exclude $50,000 in a legal settlement from income or have it taxed as capital gains—and they succeeded in neither attempt.
Read MoreThe IRS has issued another notice to “clean up” problems created by Congress’s delay in extending expired code provisions, waiting until late December to pass the Tax Increase Prevention Act of 2014 (TIPA 2014). In Notice 2015-13 the IRS provided procedures to be used for employers that hired individuals that retroactively qualify as “targeted” individuals during the period where the work opportunity credit under IRC §51 had expired.
Read MorePhishing scams masquerading as the IRS have now moved from attempting to get access to taxpayers’ personal information to attempting to obtain e-services and Electronic Filing Information Number (EFIN) information from tax professionals, according to IRS News Release 2015-31.
Read MoreA taxpayer who received advice from an adviser at a financial institution to which he planned to transfer her IRA was given relief by the IRS in PLR 201508021. That by itself is not unusual, but the nature of the “deficiency” in the advice was a bit unusual, as the situation was one where the IRS could have concluded that this was actually a taxpayer error, something the IRS has generally not been willing to forgive.
Read MoreThe Tax Court had to decide when a part of the gross income of an estate is considered “permanently set aside” for a charitable purpose as defined in IRC §642(c)(2) in the case of Estate of Belmont v. Commissioner, 144 TC No. 6. In such a situation an estate would be allowed a charitable contribution deduction for the year in which this occurred.
Read MoreThe continuing saga of employer reimbursement of individual health plans took another turn in IRS Notice 2015-17 which provides relief to taxpayers with arrangements in violation of Notice 2013-54.
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